A recent conversation on the Get Rich Slowly forum about finances and children caught my eye — specifically, how do you balance the desire to give your children everything they want (or everything you did or didn’t have) with the practical need to limit expenses?

This is an issue that Jak and I negotiate regularly, because we have very different natural approaches. He is a pushover susceptible to unplanned financial generosity where the children are concerned, whereas I am a tightwad firmly grounded in the practical.

For example, we recently signed up for an expensive orthodontic regime for Michaela, who is fifteen. Jak and I agreed to pay extra for the best medical treatment but for none of the short-term cosmetic-only ‘upgrades’ that were offered, like clear or colored braces.

All was fine until, at the second ortho visit, Michaela started begging Daddy for the clear braces, which instantly triggered Jak’s kid-generosity reflex and returned the intra-parental negotiations to square one.

For my part, I remain relatively unswayed by pleading children. In Round Two negotiations what I proposed to Jak was this: we tell Michaela that we aren’t going to pay for the clear braces, but that if they are really important to her, she could earn the money herself between August and December (when the braces actually go on). This would be an achievable goal, as she earns $5/hour for chores at our house, including babysitting her younger sister, and occasionally earns more for babysitting elsewhere, along with money her mother pays her. (Currently she spends money almost as fast as she makes it, mostly on movies, at coffeeshops, and on the occasional expensive trendy clothing item.)

Privately, Jak and I agreed that if Michaela were motivated to earn the entire amount, we would surprise her by paying half, leaving her with $150 of her savings. My thought was that if Michaela weren’t willing to sacrifice anything to get the more unobtrusive braces, we shouldn’t be expected to do so. But if she proved she was willing to put in the extra effort, we would reward her by helping. This plan would have the added benefit of giving her more experience at saving and making tough financial choices, something I’ve been actively looking to promote.

Jak relayed the plan to Michaela — minus the secret match — and she dropped the whole idea. I think Jak was a little nonplussed that her desperate pleading had so easily turned to nonchalance, but I was unsurprised: like most kids, I think she values her own time and money very highly but has little concept of the cost to adults of either. Eventually, she will learn … before she’s a full adult herself, if I can manage it.

Despite the fact that Michaela didn’t ‘take the bait’ and choose to save for something she wanted, I think this was a very good approach, and plan to use it often over the next three years. Eventually there will be something that she is motivated to sacrifice for, and she’ll get that experience. In the meantime, we saved $300.

14 responses

– Clearly it’s better to set limits, but having had my mother impose a “what you earn during your summer/odd jobs = your luxury budget for the year,” I tend to go into a schizophrenic happy/panic mode a lot when I think about small luxuries. I think that’s because “monthly budgeting” isn’t so often taught — HOW would she know where to save for her braces and where to spend for small luxuries, assuming she were somewhat willing to make a sacrifice? Knowing how to do that might make her less reluctant to try it.

I hereby request karawynn’s advice on tracking money, budgets and how things can reasonably be broken down :) Also, I want a pony…

– An explanation of how the general household expenses are broken down, and where the money went, is something I never got to see. Or an explanation of why saving for retirement was important. Therefore, large scale budgeting is also something that’s difficult for me, and I wish my parents had modeled it better.

Getting the parenting styles to mesh well is quite the challenge. I tend to be the hard-liner with occasional forays into absurd splurging, while The Other Parent tends to simply not pay attention to the bottom line so she alternates between “We can’t afford anything!” and “Sure, we can do [Really Expensive Treat Expenditure], kiddo!”

While the “surprise saving” method you mentioned offers a a neat bonus to the child once they’re done saving, I think the one issue there is that saving the full $300 is a bit daunting. Here’s another possibility which worked well for me: when I was young (5th or 6th grade?) I really wanted a bicycle (~$350). For my birthday, my parents gave me a homemade gift certificate which said they’d pay for half of the bike if I paid for the other half. That made the goal more achievable for me, while still letting me be proud of having worked hard to earn my bike.

I think what you offered is perfect. It would only take her 60 hrs of working to meet her goal. Here is a “I walked five miles uphill both ways to school story”. In 1968, I wanted contact lenses that cost $200.00. My parents wouldn’t pay for them, so I had to. In 1968, you made fifty cents an hour babysitting, so I had to work 400 hrs to get my contacts.

Thanks for the comment, Adrian. I think that if it were our younger daughter, who’s in fourth grade, we’d approach it more like what you described. But Michaela is in tenth grade this year, and $300 is a lot more readily achievable for a fifteen-year-old! The earning is far less of an issue than the saving — for example, I’ve seen her lay down $75 for a single item of branded clothing. I estimate she usually earns at least $100 a month without even trying, just from parents and maybe a couple hours’ babysitting the toddler next door.

Kim, if she’d shown a desire to save up for clear braces instead of just dropping the issue when it became a matter of her own money, of course I would have helped her through the process of budgeting and saving! I still will; I just need to find something that she wants badly enough. Drivers’ ed school might be the ticket …

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